You win a lottery of Rs.1,000,000/-, you have a choice between spending the money now or putting it in a bank account for 5 years that pays you 5% per annum. Calculate the opportunity cost of spending money now?

Explain why the total benefits to the local economy are higher when we use the simple spending multiplier.  Specifically, what are we assuming about this city when we calculate benefits using the simple spending multiplier formula?

If the MPC = 0.9, MPI = 0.1 and if investment spending increases by $200, the level of income or real GDP will be _____.

Assume that potential real GDP is $300 and equilibrium real GDP is 150 the spending multiplier equals 5. What is the recessionary gap?

The US decided to spend it's way out of the recession and England decided to cut spending. Compare and contrast the two ways to deal with the recession: austerity or spending, reducing interest rates and QE. Has there been a difference in GDP growth?

Using a carefully drawn Phillips Curve, explain what's going on with the US economy since COVID-19 an the US lockdown. Remember that as unemployment rates increased, consumer spending decreased, and deflation incurred as consumer spending greatly decreased.

Part #4: E Company has budgeted sales revenues of $160,000 for May, $210,000 for June, $235,000 for July, and $172,000 for August. To prepare a cash budget, the company must determine the budgeted cash collections from sales. Generally the trend has been 55 percent collected in the month of sale, 25 percent collected in the month following sale, 18 percent collected in the second month following sale, and 2 percent uncollectible. Also, E Company grants a 2 percent cash discount to customers who pay in the month of sale (so they only collect 98 percent of the total amount for those sales instead of the usual 100 percent). Prepare a schedule of cash collections for the month of July only. Part #5: At the beginning of September, L Company had 1,600 finished goods units. Budgeted sales for October, November, December, and January are 8,000 units and 10,200 units and 13,600 units and 7,400 units respectively. L Company wants to have sufficient units on hand at the end of each month to meet 20 percent of the following month’s budgeted sales. Prepare a Production Budget with columns for October, November, December and Total 4th Quarter.Part #6: H Company’s Direct Labor Budget indicates the number of direct labor hours to be used in July, August, and September are 20,000 and 19,100 and 22,900 respectively. Variable overhead is expected to be $0.80 per direct labor hour. Fixed overhead per month is expected to be $6,200. Prepare an Overhead Budget with columns for July, August, September, and Total 3rd Quarter.   

Part #5: At the beginning of September, L Company had 1,600 finished goods units. Budgeted sales for October, November, December, and January are 8,000 units and 10,200 units and 13,600 units and 7,400 units respectively. L Company wants to have sufficient units on hand at the end of each month to meet 20 percent of the following month’s budgeted sales. Prepare a Production Budget with columns for October, November, December and Total 4^th Quarter.

Part #6: H Company’s Direct Labor Budget indicates the number of direct labor hours to be used in July, August, and September are 20,000 and 19,100 and 22,900 respectively. Variable overhead is expected to be $0.80 per direct labor hour. Fixed overhead per month is expected to be $6,200. Prepare an Overhead Budget with columns for July, August, September, and Total 3^rd Quarter.

The Council of Economic Advisers requests that you carefully describe and explain at least two long-run macro policy options that the President can consider to boost productivity growth and potential GDP. These policies should be aimed at raising potential GDP and shifting the Long Run Aggregate Supply curve (LRAS) out over time. The administration is considering several policies that could boost productivity over the long run. These policies include massive infrastructure spending, various tax breaks, as well as policies that could bring manufacturing activity back to the United States. Describe how the policies that you propose will affect real GDP. Recall that GDP = Consumption Spending + Investment Spending + Government Spending + Trade Balance (Exports – Imports)

(PLEASE DO NOT ANSWER IN HANDWRITING)

1 What is the main variable that influences consumer spending? If income rises by $100 billion, causing consumption to increase by $85 billion, calculate the MPC (or marginal propensity to consume).

2 Besides an increase in income, what are two more major factors that could cause consumer spending to increase?

3 What are two major factors that could cause investment spending to increase?

4 What are two factors that could lead to an increase in the trade deficit? (Note that I want more than a change in exports and imports; I want factors that would cause these to change.)

5 Suppose that investment spending rises by $500 billion with an MPC of .75. Calculate the change in GDP.

6 Suppose that exports fall by $150 billion with an MPC of .7. Calculate the change in GDP.

Fixed Overhead Spending and Volume Variances, Columnar and Formula Approaches

Branch Company provided the following information:

Required

Enter amounts as positive numbers and select Favorable (F) or Unfavorable(U).

1. Using the columnar approach, calculate the fixed overhead spending and volume variances.

2. Using the formula approach, calculate the fixed overhead spending variance.

$  

3. Using the formula approach, calculate the fixed overhead volume variance.

$  

4. Calculate the total fixed overhead variance.

$  

QUESTION 7

1. Who is responsible for implementing fiscal policy? Check all that apply.

   		Mayor
   		Congress
   		President
   		Federal Reserve Chairperson

QUESTION 8

1. If an economy has a high inflation that is negatively affecting the country, how could fiscal policy be used to combat this? Check all possible correct answers.

   		Cut taxes.
   		Raise taxes.
   		Cut government spending.
   		Raise government spending.
   		Cut interest rates.
   		Raise interest rates.

QUESTION 9

1. Suppose an economy is experiencing very high unemployment. How could each tool of fiscal policy be used to combat this problem? Check all possible correct answers.

   		Cut taxes.
   		Raise taxes.
   		Cut government spending.
   		Raise government spending.
   		Cut interest rates.
   		Raise interest rates.